When such ventures are attempted in the private sector, they go by the name of pyramid or Ponzi schemes and constitute criminal fraud.

These returns were actually generated from the principal of members who joined later - a classic Ponzi scheme which uses new money to pay off old ‘profits’.

It's a bit like a Ponzi scheme, where initial investors are paid off with money from subsequent investors to make it appear that the investment is a success and drum up more investors by word of mouth.